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CIRCULAR No

CIRCULAR No. 106/2000/TT-BTC OF OCTOBER 24, 2000 GUIDING THE TAX REDUCTION AND EXEMPTION FOR FLOOD-STRICKEN AREAS

In recent years, floods have frequented many regions throughout the country, causing human and material losses to the State, organizations, households and individuals; at the same time, adversely affecting production and business activities as well as life of the organizations, households and individuals in the flood-stricken areas. Pursuant to the current tax laws; pursuant to the Government�s Resolution No. 15/2000/NQ-CP of October 6, 2000; in order to help organizations, households and individuals in the flood-stricken areas soon overcome consequences, restore production and business and stabilize their life; the Finance Ministry hereby guides the tax reduction and exemption for organizations, households and individuals in flood-stricken areas as follows:

I. Value added tax (VAT) exemption and reduction

1. For business establishments that pay taxes by mode of tax deduction:

- Goods with input VAT shall be promptly certified and fully deducted by the tax bodies. Output VAT shall be declared in strict accordance with the quantity of goods actually sold. Where the input VAT is larger than the output VAT, the tax shall be refunded monthly.

- Enterprises and business establishments paying VAT, if suffering from losses, shall be entitled to tax reduction as prescribed in Article 28 of the Value Added Tax Law.

2. For business households that pay taxes by mode of direct calculation method and tax package:

The tax exemption or 50% reduction of the payable tax amount for one or two months shall be considered, based on the extent of losses caused by floods to each business household. The provincial/municipal People�s Committees shall determine the loss amounts and stipulate the tax reduction or exemption.

II. Enterprise income tax (EIT) exemption and reduction

1. For enterprises and business establishments, the expense for overcoming flood consequences shall be recognized as reasonable expense to determine taxable income. If the taxable income is reduced to none after this reasonable expense is cost-accounted, they shall not have to pay the EIT. In cases where expenses have already been fully calculated, but enterprises and business establishments still suffer from losses, the loss amount shall be transferred to the taxable incomes of the subsequent years (for a period of 3 years).

2. For industrial, trade and service business households, the EIT exemption and reduction shall comply with the provisions of the Finance Ministry�s Circular No. 24/2000/TT-BTC of March 30, 2000 guiding the implementation of the Prime Minister�s Decision No. 08/2000/QD-TTg of January 17, 2000 on EIT exemption and reduction for industrial, trade and service business households struck with unexpected natural disasters, fires or accidents.

III. Land rentals and housing/land tax exemption and reduction

1. Land rentals exemption and reduction:

For production and business establishments that currently register land-rent contracts and pay land rentals to the State, depending on the extent of their losses, they shall be entitled to land rental exemption or reduction as follows:

Production and business establishments that suffer from a loss of over 50% of the asset value, and need a long period of time to overcome the flood consequences to stabilize their production and business activities, shall be entitled to the land rental exemption for 1 year.

Production and business establishments suffering from a loss of under 50% of the asset value shall be entitled to the land rental reduction of around 50% for 1 year.

2. Housing/land tax exemption and reduction:

For rural and urban households, business establishments with acreage declared for housing/land tax payment, that have their houses or construction works swept away or collapsed by floods, they shall be entitled to the housing/land tax exemption for 1 year.

For rural and urban households, business establishments with acreage declared for housing/land tax payment, that have their houses or construction works damaged by floods and needed to be repaired, they shall be entitled to 50% housing/land tax reduction for 1 year.

The provincial/municipal People�s Committees shall stipulate the determination of the damage levels and housing/land tax exemption or reduction.

IV. Agricultural land use levy exemption and reduction for agricultural production house-holds in flood-stricken areas

The agricultural land use levy exemption and reduction for agricultural production households in flood-stricken areas shall comply with the provisions of the Finance Ministry�s Circular No. 79/2000/TT-BTC of July 28, 2000.

The provincial/municipal People�s Committees shall decide the agricultural land use levy exemption and reduction for agricultural production households in flood-stricken areas at the proposals of the directors of Tax Departments.

V. Implementation organization

1. The presidents of the People�s Committees of the provinces and centrally-run cities shall have to:

Base themselves on the provisions of the tax laws and the above guidance to direct the local tax bodies and concerned branches to promptly organize the tax exemption and reduction, in strict accordance with policies and for the right organizations, households and individuals in flood-stricken areas in their respective localities; direct local information and propagation agencies to enhance the work of propagation and explanation of State policies on tax exemption and reduction for flood-stricken areas so that people may know and implement them.

Specify the determination of the extent of losses so that the tax bodies can have grounds for considering the exemption or reduction of each type of the above-said taxes for organizations, households and individuals in flood-stricken areas.

2. This Circular takes effect after its signing and applies to all organizations, households and individuals suffering from losses caused by natural disasters in flood-stricken areas throughout the country.

For the Minister of Finance

Vice Minister
VU VAN NINH